hey guys,, did anybody do the fiscal question. So many people have done monetary
anyway.....
could anybody check this scaffold
Stabilising fluctuations in the business cycle offers an optimistic and stable economic environment conducive to sound investment decisions by business and to encourage workers to invest in upgrading their skills to take advantage of new employment opportunities. However the depth, diversity and ever-changing nature of the economy means that governments may need to use its counter cyclical or macroeconomic policies to reduce or raise aggregate demand (AD).
• Currently economic growth has been
• For this reason, both Julia Gillard and Wayne Swan want to bring the budget to a surplus → increasing T and reducing G
• To supplement the governments objective of a rather contractionary stance, Glen Stevenson’s has promised to pursue non-inflationary economic growth through a rather neutral monetary policy stance
Fiscal policy is the heart of the management of the economy, often thought of as the most successful at stimulating AD because of its rather small time lag
Define:
exercised through budget
Current trends:
• The move from a $21.7 billion budget surplus in 2008-09 to a $57.6 billion budget deficit in 2009-10 as suggested by stimulus
• G >T, especially after the GFC. 17 years of strong growth and budget surplus especially fuelled by strong taxation from commodities
Fiscal policy commonly exercised through the budget.
• Discretionary (structural component)
• Non-discretionary (cyclical component) → through automatic stabilisers
ECONOMIC GROWTH
can use government expenditure to increase AD via the multiplie if it wants expansionary stance
define expansionary stance Rationale for this through Keneysia deflatioanry gaps
RATIONALE DIAGRAM
explain diagram and how government stiulates demand
Expansionary stance can also be achieved by redcing taxation
do the same thing if government wants a contractionary stance
define contractionary
Rationale for this through infaltionary gaps
diagram
explain
REAL WORLD EXAMPLE OF HOW government did this during gfc
Fiscal policy was very effective during GFC, for that reason treasurer got internationally recognised award
• Many people argue fiscal policy was temporary, targeted and timely, consisting of a series of one-off cash handouts, shovel-ready minor capital woks and infrastructure projects --. All discretionary policy
• Discretionary policy → targeted BER which helped construction industry
• Increased employment growth which hires ¼ workers
• Had a multiplier effect in every neighbourhood
• Tended to see less people out of work. U/E while rose to 5.2% wasn’t significant compared to other OECD countries (USA 9.6%)
• Non-discretionary policy via stabilisers → STATS
Currently with GFC over, government tends to move away reform deficit and into surplus by 2012/13. Fiscal consolidation. G < T.
• Despite current domestic and global problems, export revenue has risen and investment demand has also seen increases. G can be eased as greater exports will generate taxation for governments
This could effect income equality
As a fiscal surplus would mean that G is reducing while taxation is increasing.
Show how sometimes policy may conflict as most of the decrease in government expenditure is public services
income inequality
could effect by raising/reducing government expenditure
what happens when they reduce
what happens when they increase
Can also do this through taxation
currently have progressive taxation, but some policies have tended to make tax regressive
what hapends when they reduce taxtion --> through threshold
what happends when they increase taxation --> GST or increase in top marginal rates
In current budget:
Governemnt expenditure--> in an attempt to bring fiscal suplus reducing G i..e youth allowance decreasing, social security decreasing
threshold is increasing but top marginal rates also increasing thus retrenching inequality
GST also tend to make the taxation system more regressive
cONCLUSION: with atempts to consolidate budget the governemtn must ensure it does not increase inequality.
Also with a ore contractionary stance, the role of discretioanry policy will start to reduce
very detailed.... so what marks would i get
p.s i wrote 8 pages
anyway.....
could anybody check this scaffold
Stabilising fluctuations in the business cycle offers an optimistic and stable economic environment conducive to sound investment decisions by business and to encourage workers to invest in upgrading their skills to take advantage of new employment opportunities. However the depth, diversity and ever-changing nature of the economy means that governments may need to use its counter cyclical or macroeconomic policies to reduce or raise aggregate demand (AD).
• Currently economic growth has been
• For this reason, both Julia Gillard and Wayne Swan want to bring the budget to a surplus → increasing T and reducing G
• To supplement the governments objective of a rather contractionary stance, Glen Stevenson’s has promised to pursue non-inflationary economic growth through a rather neutral monetary policy stance
Fiscal policy is the heart of the management of the economy, often thought of as the most successful at stimulating AD because of its rather small time lag
Define:
exercised through budget
Current trends:
• The move from a $21.7 billion budget surplus in 2008-09 to a $57.6 billion budget deficit in 2009-10 as suggested by stimulus
• G >T, especially after the GFC. 17 years of strong growth and budget surplus especially fuelled by strong taxation from commodities
Fiscal policy commonly exercised through the budget.
• Discretionary (structural component)
• Non-discretionary (cyclical component) → through automatic stabilisers
ECONOMIC GROWTH
can use government expenditure to increase AD via the multiplie if it wants expansionary stance
define expansionary stance Rationale for this through Keneysia deflatioanry gaps
RATIONALE DIAGRAM
explain diagram and how government stiulates demand
Expansionary stance can also be achieved by redcing taxation
do the same thing if government wants a contractionary stance
define contractionary
Rationale for this through infaltionary gaps
diagram
explain
REAL WORLD EXAMPLE OF HOW government did this during gfc
Fiscal policy was very effective during GFC, for that reason treasurer got internationally recognised award
• Many people argue fiscal policy was temporary, targeted and timely, consisting of a series of one-off cash handouts, shovel-ready minor capital woks and infrastructure projects --. All discretionary policy
• Discretionary policy → targeted BER which helped construction industry
• Increased employment growth which hires ¼ workers
• Had a multiplier effect in every neighbourhood
• Tended to see less people out of work. U/E while rose to 5.2% wasn’t significant compared to other OECD countries (USA 9.6%)
• Non-discretionary policy via stabilisers → STATS
Currently with GFC over, government tends to move away reform deficit and into surplus by 2012/13. Fiscal consolidation. G < T.
• Despite current domestic and global problems, export revenue has risen and investment demand has also seen increases. G can be eased as greater exports will generate taxation for governments
This could effect income equality
As a fiscal surplus would mean that G is reducing while taxation is increasing.
Show how sometimes policy may conflict as most of the decrease in government expenditure is public services
income inequality
could effect by raising/reducing government expenditure
what happens when they reduce
what happens when they increase
Can also do this through taxation
currently have progressive taxation, but some policies have tended to make tax regressive
what hapends when they reduce taxtion --> through threshold
what happends when they increase taxation --> GST or increase in top marginal rates
In current budget:
Governemnt expenditure--> in an attempt to bring fiscal suplus reducing G i..e youth allowance decreasing, social security decreasing
threshold is increasing but top marginal rates also increasing thus retrenching inequality
GST also tend to make the taxation system more regressive
cONCLUSION: with atempts to consolidate budget the governemtn must ensure it does not increase inequality.
Also with a ore contractionary stance, the role of discretioanry policy will start to reduce
very detailed.... so what marks would i get
p.s i wrote 8 pages
